Phoenix -- US Airways today offered $8 billion worth of cash and stock to acquire Delta Air Lines, which has been operating under Chapter 11 bankruptcy since September of last year.
If US Airways succeeds in a what appears a hostile takeover bid, the combined airlines would create the largest domestic air carrier as measured by available seat miles. The new airline would fly to more than 350 destinations on five continents and would operate under the Delta name, said US Airways.
Delta's chief executive, Gerald Grinstein, said in a statement that Atlanta-based Delta "will of course review" US Airways' proposal. However, he immediately added, "Delta's plan has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier."
In a letter from US Airways chief executive Doug Parker to Grinstein that US Airways released publicly today, Parker wrote he was "disappointed" that Grinstein had rebuffed an earlier acquisition overture.
US Airways contends it can create synergies between the two airlines, including $1.65 billion in annual cost savings, that would create "a large-scale provider within the cost structure of a low-fare carrier." US Airways said it will reduce the combined airlines' capacity by 10 percent but will continue to serve all U.S. destinations that both airlines now serve.
US Airways proposed that the transaction be completed when Delta emerges from bankruptcy. US Airways acquired the Chapter 11 bankrupt America West Airlines in a similar fashion last year.
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